How do we know how to parse this sentence to identify the main verb? Well, you can try various patterns and see which makes sense. I'm no linguist and don't have a good academic understanding of English grammar but I would first break down the obvious elements:

"the wild flowers" - noun phrase

"looked like" - verb phrase

"a soft orange blanket" - noun phrase

"[which was] covering" - verb phrase

"the desert" - noun.

Clearly in "looked like", flowers don't have eyes so what is meant is "looked [to me] like" the the author means the "flowers were like something". So this particular verb is the past tense of "A is like B"

To identify the basic structure we can ignore the adjectives (wild, soft, orange) and articles.

We have

noun verb noun verb noun

So you want to decide whether that is

(noun verb noun) main-verb noun

or

noun main-verb (noun verb noun)

In other words whether the flowers cover the desert or whether the blanket covers the desert (or whether it really matters which covers the desert - perhaps they both do and so we don't care which is the main verb, this whole covering-the-desert thing is something that both the flowers and blanket do and that is the point enabling the comparison) The important thing here is not that the flowers cover the desert but that the flowers are like a blanket (the covering-the-desert thing is mere justification for the simile).

Generally word-proximity is a good guide. The flowers are clearly the main subject being described and the nearest verb to the word "flower" is the main one.

We can subjectively test this by substituting "throbbing purple rash" for "soft orange blanket" and notice that the relationship of the first noun to the second is of primary importance in the emotional impact of the sentence. So we can say it is the verb between those first two nouns which is probably the most important of the two verbs.

How could you know that 'looked like' is the main verb of this sentence and 'cover' is not? if 'looked like' is past participle then 'cover' must be main verb and since A is present participle, so A is wrong.
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lovespringJun 11 '11 at 3:01

1

Unfortunately, how I would know it differs from how you would know it. As a native speaker who learned this by being a tiny gurgling baby amongst people speaking English - for me it is almost entirely subconscious - I just know. It is a considerable effort to translate my subconscious knowledge into the (for me somewhat artificial and arbitrary) linguistic terminology that is needed by people for whom English is not a native language. Sorry.
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RedGrittyBrickJun 11 '11 at 10:27

example:"the girl dressed in blue is beautiful". I think the 'dressed' here is similar with 'looked'. Do you agree?
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lovespringJun 13 '11 at 3:16

@snooze: I disagree. "looked like" is a verb group. "dressed in" is a subsidiary element only describing the girl. The essence of your sentence is "the girl is beautiful" (verb "is") the essence of your original question was "the flowers resembled a blanket" (verb "resembled" or "looked like")
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RedGrittyBrickJun 13 '11 at 9:32

If looked like a soft orange blanket is a past participle, then the whole sentence should be in past tense, thus the correct choice will be B. covered

I have difficult time with looked being a past participle. To me it pretty much obviously is a verb, making the choice A. covering a correct one.

EDIT due to comments. No I don't think it is correct to say flowers looked like soft blanket meaning flowers, that someone looked at like soft blanket. You need to preserve that at in past participle, e.g. flowers looked at like soft blanket by weary travelers. Even like this, it it still is awkward.

No. "looked like a soft orange blanket covered the desert" is ungrammatical, except in the highly unlikely reading swhere "like" means "as though", i.e. "It appeared that a (real) soft orange blanket covered the desert". With the normal reading of "like" as a preposition, it is followed by the noun phrase "a soft orange blanket covering the desert", which cannot contain a finite verb. If you want to interpret "covered" as a past participle, it is passive in meaning ("covered by") and cannot take an object.
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Colin FineJun 10 '11 at 10:11

@Colin Fine In your reading looked is again a verb, not a participle. If you will be so kind to read my answer carefully, I stated, that I doubt, that looked in OP's sentence is a past participle. And after refreshing my memory of English grammar, I'm convinced it cannot be one.
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PhilotoJun 10 '11 at 10:28

@Philoto It's the simple past form of 'to look like' but that doesn't mean the rest of the sentence has to be in past tense.
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z7sg ѪJun 10 '11 at 10:50

@z7sg Here we go again. Yes, yes, yes, if looked is a verb. If, hypothetically, looked in sentence had been a participle, as OP had thought, then and only then first paragraph of my answer would have been correct. It so happens, that looked can't be a past participle, since you can't be looked, you can be only looked at.
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PhilotoJun 10 '11 at 11:12

@Philoto As I said 'to look like' is a phrasal verb meaning 'to resemble'. The flowers resembled a blanket. Your edit is very messed up, I won't downvote you for it though. :)
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z7sg ѪJun 10 '11 at 11:19